Japan is ready to cut oil imports from Iran, finance minister says

US Treasury Secretary Timothy Geithner, left, at a press conference with his Japanese counterpart Jun Azumilooks at Japan's finance ministry in Tokyo on January 12, 2012.

Story highlights

Japan imports 10% of its crude oil from Iran

Japan is ready to reduce that amount "in a planned manner," the finance minister says

U.S. Treasury secretary says he appreciates Japan's support of efforts to pressure Tehran

Iran has threatened to block the Strait of Hormuz if sanctions are imposed

Japan is prepared to gradually reduce the amount of oil it imports from Iran, Finance Minister Jun Azumi said Thursday, as the United States seeks to muster international support to put fresh pressure on Tehran over its nuclear program.

Japan imports 10% of its crude oil from Iran at the moment, Azumi said at a news briefing after meeting with U.S. Treasury Secretary Timothy Geithner. The country is ready to decrease that level "in a planned manner," he said.

"What I told the secretary is that we have already reduced Iranian oil imports by 40% in the past five years," Azumi said, standing next to Geithner. "The nuclear development issue is an issue that the international community cannot overlook, so we very much understand the U.S. action."

The United States is exploring ways to cut off Iran's central bank from the global financial system and reduce the country's oil revenues, Geithner said at the briefing.

Washington is in "the initial stages of consulting with allies around the world about how best to achieve those goals," he said, adding that Japan's support was appreciated.

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"We are working very closely with Europe and Japan and countries around the world to substantially increase the pressure we bring on Iran," Geithner said.

The announcement is a plus for Geithner, after his efforts on Iran were rebuffed by senior Chinese officials during his visit to Asian countries this week.

"I think 'small victory' is a fair categorization," said Michael Levi, a Council on Foreign Relations' expert on energy policy and national security.

From January to September 2011, Iran exported 13% of its crude oil to Japan, according to the International Energy Agency.

Levi said Iran is likely to absorb this and find alternatives -- unless those drop out as well.

"As long as Iran has a substantial set of potential buyers, it's going to make as much money as it made before," Levi said.

Levi said Japan wants to phase out its imports from Iran slowly so it can smoothly transition to other sources.

"That same slow speed gives Iran the opportunity to transition to other customers," he said.

Geithner had made a similar push for China to reduce its Iranian oil imports. But Beijing said that its imports have nothing to do with Tehran's nuclear program and rejected new U.S. sanctions on foreign financial institutions that conduct business with the Iranian central bank.

There was notably little mention of Iran in the comments made by Geithner and Chinese leaders Wednesday.

China relies on imports for half of the oil it consumes. Iran exported 22% of its crude oil to China from January to September last year, the IEA said.

Japan's government faces a difficult balancing act, trying to meet the needs of its closest ally and at the same time fuel its energy-strained country.

Japan has been facing an energy crisis since last March's earthquake and tsunami, which triggered a meltdown at the Fukushima Nuclear Plant.

While making the announcement of plans for a gradual decrease in Iranian oil imports, Azumi did not specify how quickly his country would carry out the action. He said that Japan also needed more time to deal with how to reduce non-crude oil imports.

Iran threatened in late December to block the Strait of Hormuz if sanctions were imposed on its oil exports. France, Britain and Germany have all proposed such sanctions to punish Iran for lack of cooperation on its nuclear program. Those countries and others believe Tehran may be trying to develop nuclear weapons, but Iran says its nuclear program is solely for civilian energy production.

The strait is a critical shipping lane, through which 17 million barrels of oil passed per day in 2011, according to the U.S. Energy Information Agency.